Indian corporate sector is working out to bring the International standards into the entire domestic industry. Transition from the Indian Generally Accepted Accounting Practices (GAAP) to the International Financial Reporting Standards (IFRS) is a much talked about topic in the accounting world today. According to reports, many companies have drifted their path to IFRS. However many other companies are in the process to converge their accounting principles or national GAAPs to IFRS.

"Globalization has shunned the world and with globalization the route of doing business across the world is harmonizing. It is hence inevitable to know the language in which the business speaks, the language of financial statement will also have to harmonize. Country specific standards will bring growth for transnational companies. They would drive off the cost of doing business, when companies are looking at financing internationally and moreover the corporates wants to reach out to newer markets. Even the small and mid size companies wants to reach out with their accounting practices into accessing the foreign market," says Rajiv Memani, Chairman, CII National Committee on Accounting Standards & Country Managing Partner, Ernst & Young.

"IFRS was implemented in January 2005 with more than 8,000 EU listed companies who were adopting these standards. With its inherent benefits in the global economy, countries like Australia, Honkong, China and the Middle East have mandated IFRS compliance for publicly listed companies. In line with the benefits of the IFRS to the global economy and trends, the institute of Chartered Accountants of India (ICAI) has announced a Convergence Declaration for public interest entities from 1 April, 2011. This will happen to benefit the cross-border investments, capital flow, enhanced comparability , reporting transparency and reduction in the cost of capital and compliance for enterprises," he says.

"However, IFRS has certain benefits for the Indian companies such as it is accessed to the global capital markets, low cost of capital, it attracts foreign investment, elimination of multiple report and many more opportunities," says Dolphy D' Souza, Partner, Ernst & Young.

"In fact, the consequences are far more than financial reporting issues and extended to significant business and regulatory matters including implications on performance indicators, compliance with debt covenants, structuring of ESOP schemes, training of employees , modification of IT system, implication of mergers and acquisitions and as well as tax planning," added Rajiv.

"Moreover, the domestic US companies will be reporting by using IFRS by the year 2009. Universities in the US and all across the world are changing their curriculum to train their professional in IFRS and neighboring and fellow emerging economies like China has contributed for same purpose as the companies prepare their accounts," he says.

"In short, the Indian corporates have to speak the language of the world. However, such convergence is easily mandate but it is a difficult task to get accomplished. Convergence would be very significant for corporate India as it has lesser flexibilities. However, multiple agencies such as Ministry of Corporate affairs, ministry of finance, Institute of Chartered accountant, The Reserve Bank of India, SEBI, CBDT and many more must get together for the purpose," he added.

Uday Phadke, President, Finance, Legal and Financial Services, Mahindra & Mahindra Ltd, said that the introduction of IFRS was a major opportunity for the Indian accounting profession.

"The accounting institution should impart education on IFRS. If IFRS strategy is implemented then the industry does not know the hardship that they can face or what suggestion industry would give in regards of facing the after consequences. Once the draft is thrown open for public comment and the  account has taken a position on that then changing anything will be seriously a toughest job. So, active participation  and awareness are some vital aspects that should be given prior importance," he says

Phadke further said that the Indian industry would need to adopt a proactive approach with regard to IFRS and take active part in standard formulation. He said common standards are facilitator for greater business interaction and are a necessity for companies seeking to move into overseas markets.